Processing expense claims is a necessary evil of corporate life. But expense management can be costly; in a recent CIPHR webinar, Sean Morgan from webexpenses outlined five key ways that processing expense claims could be costing your organisation more than it should be.

1. Humans are fallible

We all make mistakes, no matter how hard we try not to. Having a fully manual expense management claim process means it’s more likely that errors will creep in; research by webexpenses estimates that introducing specialist expense management software can lead to a 43% reduction in expense processing errors.

2. Claims take too long to process

Labour is often an organisation’s greatest cost-centre – and with expenses submission and reconciliation often being a time-consuming process, employers may find that they are paying people to do expense administration rather than the tasks they have been hired to do. In fact, webexpenses estimates that the average labour cost of submitting an expense claim is £22.07. Multiply this by the number of claims submitted in an average month, and your organisation could be losing hundreds or even thousands of pounds worth of labour to expense management.

3. You aren’t reclaiming VAT

Did you know that you can reclaim VAT on mileage expenses? HMRC recommends that companies reimburse staff who use their personal vehicles for business use to the tune of 13p per mile. That might not sound like a huge amount, but it can quickly add up. Take, for example, a return journey from Oxford to Marlow – 40 miles each way. Fail to reclaim VAT on that journey of 80 miles and you are losing £10.20 just for that journey. Organisations with a sizeable field force in particular will stand to gain significantly from reclaiming VAT on mileage.

4. Employees are free to make claims that are out of policy

Expense claim policies and limits are often communicated to staff when they join the organisation and are then left to gather proverbial ‘dust’ on your intranet system. If polices aren’t clear at the point of claim, then employees may feel they have leeway to make claims that are over the stipulated limit or lack the required proof to support them. Couple that with a manual submission process – one that doesn’t involve gaining line manager approval for out-of-policy claims – and staff may be tempted to more frequently make claims that don’t comply with your stated limits.

5. Fraudulent claims aren’t being challenged

Around 16% of UK staff admit to exaggerating an expense claim, said Morgan, with the UK national average overclaim per person costing £29.40. Consider that the average member of staff makes 15.35 claims per year, and the annual cost of overclaims per staff member per year could be as high as £451.29, according to webexpenses’ figures.